THE REASON FOR THE EXCEPTIONAL
i. War: If a
short age is feared in anticipation o f war people ma y start buying for
building stocks, for hoarding even when the price rises.
a depression, the prices o f commodities are very low and demand for them
is also less. This is because of the lack of purchasing power with consumer.
iii. Giffen paradox: If a commodity happens to
be necessity of life like wheat a nd its price goes up, consumer are
forced to curtail the consumption of more expensive foods like meat and fish
and wheat being still the cheapest
the y will consume more
for it. The
marshallion example is applicable to develop ed economies. In the case
of underdevelopment economy, with the fall
in the p rice of an
inferior commodity like
maize. Co nsumers will
start consuming more o f the superior commodity like wheat. As a result,
the demand for maize will fall .this is what Marshall called giffen parado x
whic h makes the d emand curve to have a positive slope.
iv. Demonstration effect: It
consumers are affected b y the principle of conspicuous consumption or
demonstration effect the y will like to buy more o f those commodities which
confer distinction on the possessor, when their prices rise. On the other hand,
with the fall in the prices of such articles, their demand falls, as is the
case with diamonds.
v. Ignorance effect: Co
nsumers buy more at a higher price under goods the influences of the ignorance
effect where a commodity ma y be mistaken for some other co mmodity, due to its
price, deceptive packing, label, etc.
vi.Speculation: Marshall mentions
speculation as one of the
important exception to the
downward sloping demand curve. According to him
? the law of the demand does not apply to the
demand in a campaign between groups of speculators. A group, which desire to
upload a great quantity of a thing on to the market, often begins b y buying so
me of it openly; it arranges to sell a great deal quietly and through unaccustomed channels.?